More homes purchased via mortgages are being put on the rental market in the UK. In 2019 than in how many years?
People purchase houses with the intention of renting them out to tenants to safeguard against inflation, diversify their holdings, deduct expenses from their taxable income, and regularly receive inflows of cash. Generally, prospective landlords will only consider gobbling up homes to be rented if they have enough cash to purchase them outright.
Taking out mortgages to purchase rental homes is generally considered to be a risky financial move, though more people are doing it across the United Kingdom right now than ever before.
In the United Kingdom, rental homes purchased with loans are known as buy-to-let houses, pieces of real estate, or products. Although people engage in this type of activity all over the planet, the United Kingdom is home to a particularly high number of these rental houses.
So, how much has the buy-to-let industry grew over the years?
Just short of 12 years ago, in Oct. 2007, the United Kingdom was home to a paltry 3,305 homes, all of which were purchased with mortgages, that were being advertised for rent.
The buy-to-let industry had never been that popular in the U.K., but investors and hopeful businesspeople have taken out notes to buy houses just to turn around and rent them out for several decades.
In the half-decade leading up to this time – Oct. 2007 – financial institutions across the United States had largely reached a plateau in terms of consumer lending, specifically related to the business of granting prospective homeowners mortgages. The market was essentially maxed out. There was no ripe fruit to pick on the proverbial trees of the market, so to speak.
Without publicly coming out as changing their lending policies to open up the doors of long-term financing to purchase homes, the majority of mortgage lenders in the United States began making bad decisions in determining which home loan applicants would be approved for hundreds of thousands of dollars of debt – at the very least,these borrowers were taking out one hundred thousand dollars to purchase houses to settle down in.
All houses of cards come falling down at one point or another
As the years neared closer to Oct. 2007, lenders across the United States continued to provide people who were financially unfit to pay mortgages back, a class of potential borrowers also known as subprime borrowers.
Around this time, news broke around the country that an alarming number of people were unable to make payments on their mortgages. This resulted from a brief economic downturn that ultimately compounded into the Great Recession, the second-worst recession to hit the United States since the Great Depression nearly 100 years ago.
As the world’s leading economic powerhouse, the United States’ financial downfall led to downturns around the globe. The United Kingdom was no exception.
The buy-to-let market didn’t fare well for a few years. The industry took a disproportionate amount of rule changes on the chin.
Where are buy-to-let houses at today?
Right now, in March 2019, U.K. borrowers can apply for more than 2,150 mortgages! This is the highest number of varieties of mortgages in 10-plus years.
Rates for these opportunities aren’t dropping even though they’re becoming more popular. They’ve actually risen over the past year-and-a-half.
To haul in more borrowers, lenders are offering low-deposit options ranging from down payments of just 15 percent to be granted mortgages. However, most of these mortgage offers are being offset by high rates.
Fortunately for investors, highly-qualified borrowers are eligible for mortgages ranging as low as 1.79 percent Through April 2022, though this offer requires a slightly higher down payment of 25 percent.